MT Interview: Matt Galvin, Volvo commercial director

Volvo has set out a target to have its network fully accredited by the Electric Vehicle Approved (EVA) scheme in 2021. The target was outlined at a briefing, which also covered its sales targets for EVs and Care by Volvo scheme. The scheme was developed by the National Franchised Dealers Association (NFDA) and the Energy Saving Trust (EST)  in 2019.

“We have 72 about retailers currently going through the process of accreditation leaving just 15 to complete. So, I’ll be really happy to announce hopefully, later on this year, that we’ll be one of the first franchise retail networks that hold 100% accreditation,” Volvo commercial director Matt Galvin told Motor Trader.

The EVA audit of Volvo dealers’ business is performed by the Energy Saving Trust, resulting in either a pass or referral. NFDA is the awarding body and on receipt of a successful audit report will grant the dealership site EVA membership.

The EVA Standards is a five-page document, which sets out what dealers have to do when selling and repairing electric vehicles. Each dealer has an “EV Ambassador” who is responsible for ensuring the site meets the set standards and for fostering a positive culture in house and the progressive take-up of EVs.

Sales ambitions

The EVA push reflects Volvo’s ambitions for sales. By 2025, it aims for 50% of its global sales to consist of fully electric cars, with the rest hybrids. It aims to be a fully electric car company globally by 2030, with all EVs available online only. Year to date PHEVs accounted for 26% of registrations and it plans for this to rise to a third.

“We’ve got ambition to have around 35% of our sales, mix in the UK as plug-in hybrid variants,” said Galvin.

Volvo is having a good 2021 in new car sales. Year to date the UK market is ahead 39% while Volvo is up 53% when compared with 2020. For a more realistic comparison the UK market is down 29% on 2019, pre-pandemic while Volvo is down -10%.

The brand is pushing hard with its Care by Volvo subscription scheme which offers customers a 30-day trial, including MoT, servicing, warranty, flexible mileage, roadside assistance and three months’ notice to change car for a monthly fee. Volvo had 379 confirmed orders in June, which it said was the best performance so far, accounting for 10% of Volvo retail sales. A third, 35%, of these were retailer assisted sales with dealers playing an active part.

“The retailer is still very much involved. The Retailer Assisted sales tool enables a customer to come in and test drive a car as they would normally. It’s a true omni-channel experience. They can use the website to see what cars are available and can then visit a retailer to complete a test drive or just get general advice. And they can either choose to conclude that sale in the showroom with the sales consultant or return home to their sofa and do the sale online. The retailer is still absolutely involved. 35% of sales were actually concluded with the help of a retailer in June and we see that that going to 50% by the end of this year,” said Galvin.

Volvo has looked closely at the size of its UK network with a significant investment by dealers in the Corporate Standards and new look. It believes it now has the right number of dealers although this could change over time.

Network size

“We have completed a full representation review looking at what we’re aiming to achieve, over the next five years in terms of our volume ambitions. We feel we have got the right size network and the right size footprint. We’ve got about 96 full points of representation and we don’t see that growing and equally we don’t see that shrinking in the very short term,” said Galvin.

“But with the development of more direct sales, more online sales, you know, there could be the need to review that in the next three to five years to see whether it’s still the right size because you could potentially need slightly fewer points to serve that marketplace,” he said.

This appears to have caused concern with some dealers. In the two most recent National Franchised Dealer Association Dealer Attitude Survey Volvo scored low when it came to dealer satisfaction with the capital investment they had to make. Are smaller dealers unhappy with the investment in premises? Galvin said he is not seeing concerns from dealers

“What we are able to demonstrate for people that have completed the investment is a much higher level of customer satisfaction and higher levels of inquiries because the environments are that much nicer. Anyone that wasn’t sure is now convinced and making plans to make the investment. We will have all retailers fully completed by the end of next year. I think there’s only about 25 retailers that have yet to start the development” he said.

That aside, Volvo performed well in the NFDA survey. Galvin paid tribute to the dealer network and how they responded during the lockdowns.

“The retail network has been absolutely outstanding, probably the most proactive brand.

We learned from the first two lockdowns and continued to trade almost as if we weren’t closed.”

Semi-conductor shortage 

Volvo like all car makers has been impacted by the semi-conductor shortage, which has hit new car supplies. So, what is the current situation, and will dealer supplies be impacted later this year?

“We are managing the situation on a pretty much weekly basis n terms of our supply of semiconductors. We’ve been adapting our outputs to match the supply of those chips,” said Galvin

“We’re going to work closely with our suppliers to minimize the impact as we as we go forward. But let’s be clear. It’s going to be more disruption ahead for everybody. There are 80 to 130 semiconductors in any one of our cars depending on what sort of level of specification they’ve got.

“What we’ve been doing is prioritising customer sold vehicles to make sure they get they get assembly conductors. So, the way that the factories prioritising their build schedule is to first serve those that are salt retail sold, or fleet sold giving less priority to internal sales channels such as our, company cars and daily rental.”

And where does Galvin see the market going for the remainder of 2021 and into 2022?

“I think it’s unrealistic to expect to repeat of 2019, 2.3 million market equally, maybe a 1.9 million to 2 million car market this year. It will not recover to 2019 levels because of the supply issue. Our order book is very big, about 3,000 units higher than we were in 2019. So, demand is definitely there,” he said.